 "Bharti Airtel Africa: Two done, more to follow?")
In line with its strategy to focus on only key Africa businesses, Bharti Airtel's sold its Burkina Faso and Sierra Leone segments, which have a combined annual revenue of euro 275 million, to Orange of France. The sale is part of the ongoing negotiations initiated in July, and did not include Chad and Congo-Brazzaville, part of the earlier talks, as agreements regarding the potential sale in the latter two countries have lapsed.
The deal value was not disclosed. However, as it is done at 7.9 times the expected operating profit for the two countries in FY16, Bharti would get $700-750 million. Analysts estimate the total sale proceeds for the four countries to be around $1.2 billion. The four account for revenue of 15-16 per cent of the consolidated African business, with Bharti being the largest player in Burkina Faso and number two in the other three. Bharti has so far invested Rs 5,200 crore in these countries. The deleveraging should help cut part of the $10.8 billion debt.
Performance of the African operations has been below par, partly due to a slowdown in these countries, triggered by falling commodity prices, and weak currencies. While the company has been looking at reducing its leverage with the earlier sale of tower assets in Africa, analysts at Edelweiss Securities say a substantial deleveraging in the Africa business will be key for a re-rating of the stock. So far, the company has concluded the sale of 9,000 towers worth $1.8 billion, with those of another 3,500 towers pending, which could fetch $600 million.
In India, the company's spectrum footprint is much better than peers but given the Reliance Jio launch, capital expenditure is expected to be high, depressing the return ratios, they add.
While the key risk would be a sharp cut in data rates, Rajiv Sharma of HSBC says the company remains best placed to benefit from the data opportunity, given its fourth-generation (4G) spectrum in 17 circles and 3G across India. Sector consolidation, according to him, is positive for Bharti, as it will encourage 4G entrants to be much more rational in pricing.
The deal value was not disclosed. However, as it is done at 7.9 times the expected operating profit for the two countries in FY16, Bharti would get $700-750 million. Analysts estimate the total sale proceeds for the four countries to be around $1.2 billion. The four account for revenue of 15-16 per cent of the consolidated African business, with Bharti being the largest player in Burkina Faso and number two in the other three. Bharti has so far invested Rs 5,200 crore in these countries. The deleveraging should help cut part of the $10.8 billion debt.
Performance of the African operations has been below par, partly due to a slowdown in these countries, triggered by falling commodity prices, and weak currencies. While the company has been looking at reducing its leverage with the earlier sale of tower assets in Africa, analysts at Edelweiss Securities say a substantial deleveraging in the Africa business will be key for a re-rating of the stock. So far, the company has concluded the sale of 9,000 towers worth $1.8 billion, with those of another 3,500 towers pending, which could fetch $600 million.
In India, the company's spectrum footprint is much better than peers but given the Reliance Jio launch, capital expenditure is expected to be high, depressing the return ratios, they add.
While the key risk would be a sharp cut in data rates, Rajiv Sharma of HSBC says the company remains best placed to benefit from the data opportunity, given its fourth-generation (4G) spectrum in 17 circles and 3G across India. Sector consolidation, according to him, is positive for Bharti, as it will encourage 4G entrants to be much more rational in pricing.